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FERC Should Deny Petition for Natural Gas Export Exemption

Public Citizen News / July-August 2021

By Josephine Fonger

This article appeared in the July/August 2021 edition of Public Citizen News. Download the full edition here.

Public Citizen is on the case of a Florida-based liquid natural gas (LNG) company that is trying to evade restrictions on exports. In April, the Florida-based Nopetro LNG petitioned the U.S. Federal Energy Regulatory Commission (FERC), arguing that a planned new natural gas liquification terminal and export port in the Florida city of Port St. Joe should be exempt from FERC oversight. The reason? Nopetro plans to transport liquified natural gas from a liquification terminal to a planned port, a mere 1,329 feet away, by truck, instead of the standard pipelines.

Allowing Nopetro LNG to circumvent the FERC’s oversight by placing their export docks close enough to liquification terminals to avoid the use of pipelines is a slippery slope that may allow future LNG companies to exploit the loophole and evade FERC jurisdiction, according to Public Citizen.

“Should the Nopetro petition succeed, there will be nothing stopping liquification developers from placing facilities 500 feet or 50 feet from export docks to exploit the Nopetro Loophole,” said Tyson Slocum, director of Public Citizen’s Energy Program. “To preserve the Commission’s Natural Gas Act authority over LNG export terminals, the petition must be denied.”

The Natural Gas Act requires companies to secure FERC authorization before exporting natural gas to a foreign country. Nopetro LNG stated that the liquification facility would produce LNG for export to the U.S. trading partners in the Caribbean, Central America, and South America. The U.S. Department of Energy (DOE) even granted Nopetro LNG to export up to 51.75 billion cubic feet of natural gas every year. This further solidifies the need for FERC oversight on Nopetro LNG’s latest project.

“To claim that an LNG terminal located a stone’s throw from an export dock renders the facility not subject to FERC’s regulation would eviscerate the Commission’s NGA authority and likely usher a wave of similar LNG export terminals located within shouting distance from an export dock in an effort to evade Commission oversight,” said Slocum.

In response to criticism, Nopetro LNG said the project was developed to be consistent with the Department of Energy’s small-scale LNG rule that allows exporting ISO containers to smaller foreign markets not targeted by larger LNG projects. Furthermore, they claim that DOE delegation orders hold that FERC doesn’t have jurisdiction over projects that do not involve transportation by pipeline.

Nopetro also touted the environmental considerations on the new project, claiming that its LNG would replace “diesel fuel and No. 2 oil consumption in markets that are not currently served by cleaner alternative fuels.” Nopetro argued that the project would aid economic recovery in the Florida region devastated by Hurricane Michael in 2018.

“LNG exports are a false solution to clean energy or climate change. The United States should be focused on exporting renewable energy technologies like wind and solar to displace diesel and coal overseas – not natural gas,” said Slocum in response to Nopetro’s claims. “And regardless of whatever merits Nopetro’s owners claim, any benefits should be assessed as part of FERC jurisdiction. Allowing the Florida LNG export project to evade FERC jurisdiction will trigger a race to the bottom of LNG export terminal proposals designed to follow Nopetro’s loophole.”

To preserve its legitimacy and authority, FERC must deny Nopetro LNG’s petition seeking exemption from oversight. This decision will prevent other companies from taking similar steps to exploit loopholes in the regulations meant to protect the American people and environment from hazardous materials.